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The Millennium Project begins its report Investing in Development: We have the opportunity in the coming decade to cut world poverty by half. Billions more people could enjoy the fruits of the global economy. Tens of millions of lives can be saved. The practical solutions exist. And for the first time, the cost is utterly affordable. Whatever one's motivation for attacking the crisis of extreme poverty - human rights, religious values, security, fiscal prudence, ideology - the solutions are the same. All that is needed is action. This ringing expression of hope may sound utopian but it is correct. After 60 years of uneven but often rapid and widespread economic growth, the world is far richer than ever before in human history and has unprecedented technological capacity. Therefore the global capacity to tackle poverty is greater than ever before. The Millennium Project report, called the Sachs report after the chair Professor Jeff Sachs, describes many of the required policies. The issue is whether the world has the political will to use those resources and technical capacity to achieve the Goals. Each of us can make an impact on what our own countries do. The MDGs were derived from the Millennium Declaration adopted by 189 countries at the UN Millennium Summit in New York in September 2000. The Millennium Declaration has the political authority of being adopted by the largest meeting of heads of state and government ever held. The Goals, and the targets based on them, have strong political commitment and the momentum of being taken seriously by all but a very few countries. The MDGs are comprehensive poverty reduction targets mostly supported at the highest levels of government. The MDGs not only sets targets for developing countries - for halving poverty, universal primary education, promotion gender equality, reducing child mortality, improving maternal health, combating AIDS, malaria and other diseases, and ensuring environmental sustainability. Goal 8 commits donor countries to a global partnership for development. The targets relating to Goal 8 include open and non-discriminatory trading and financial systems, more generous aid to countries committed to poverty reduction, and debt sustainability. In 2005 many countries responded to this goal. An important example is the European Union which has set a target of raising the joint average level of aid for all 25 member states from 0.33 per cent of national income to 0.56 per cent by 2010. In real terms such an increase will mean $25 billion more aid for developing countries. Since the Monterrey conference, Belgium, Britain, Finland, Ireland, France and Spain have made firm commitments to join Denmark, Luxembourg, the Netherlands, Norway and Sweden in contributing over 0.7 per cent of GDI to ODA. The usually very diplomatic Kofi Annan has begun to publicly draw attention to the US, Canada, Japan and Australia which are the major donor countries which are failing to move significantly towards the UN target for aid. Why is the response from these countries so weak? Why have they decided to do so little about reducing poverty? What are the impediments to increasing aid and what can be done about them? Amongst the impediments might well be public ignorance and political misunderstanding. Common sense generally prevails if people are given enough accurate, relevant information. It is therefore shocking to find that many of the least generous donors also spend little on development education. Fortunately some NGOs are far more active; the Make Poverty History campaign is perfectly targeted; the news services play a role and Live8 made an impact. One goal of all those advocating increased aid is to urge governments, NGOs and scholars to spread more accurate information about the problem. We can be grateful for the efforts of Bono and Geldof and for films like 'The Constant Gardiner'. It is important to address criticisms of aid. Some observers argue that developing countries have sufficient capacity to raise any additional funds they need from domestic sources, supplemented by foreign direct investment and borrowing. Others doubt the effectiveness of aid, arguing that it doesn't stimulate economic development. That used to be a common comment in Europe and North America but it is heard much more rarely now, for there is considerable solid research ammunition against a comprehensive dismissal of this sort. Recent surveys have generally reached positive conclusions about the value of ODA. For example, Mark McGillivray has surveyed the literature on aid and growth and concludes that 'the overwhelming majority of recent empirical studies find that aid increases growth, despite many valid criticisms of aid delivery.' Aid increases public expenditure, including expenditures that aim to improve services for the poor. Donors are tending to focus more actively on policies that assist development than in the past, when the objectives of aid were more diffuse. In an influential paper published towards the end of 2004 Clemens, Radelet and Bhavnani divide aid into three categories: emergency and humanitarian aid; aid that could affect growth only over a long period of time, such as to support democracy, the environment, health or education; and aid that could plausibly stimulate growth within four years, including budget and balance of payments support, and also investments in infrastructure and for productive sectors such as agriculture and industry. There is a strong, positive relationship between aid of the third kind, which accounts for 53 per cent of all aid flows, and economic growth over a four-year period, two to three times as large as between aggregate aid and growth. 'Even at a conservatively high discount rate, at the mean a $1 increase in short-impact aid raises output (and income) by $1.64 in present value in the typical country.' This clearly suggests that aid targeted at stimulating growth is likely to be effective. Without much higher levels of aid many countries will not be able to escape the poverty trap in which many of the poorest countries are stuck. They desperately need capital for investment but lack capacity to significantly increase their domestic saving or to attract foreign investment (FDI). Subsistence incomes leave little scope for saving. Micro-credit schemes are valuable and often effective, but are small in comparison with national need. In poor countries, the salaried and self-employed middle class with capacity to save or be taxed is proportionally small. The rapidly growing East Asian countries, including China, have demonstrated that high domestic investment, especially reinvestment in family businesses small and large, can trigger an economic miracle. However, most poor countries have not reached a sufficient base for such substantial reinvestment. As well, most developing countries can expect relatively little assistance from foreign investment. Most international financial flows are between already developed countries. About three quarters of the world's savings are going to the US alone and so has become the world's largest debtor. Most of the remaining FDI is between other developed countries. China and a score of other large developing countries receive most of the rest. Poor countries are rarely attractive to foreign investors. Their populations are often small and average incomes low so markets are tiny. They can rarely offer externalities of links with other investors. The have poor transport infrastructure and weak human capital. It is therefore simplistic for some to argue that 'For the developing world, it is trade and investment, not aid that will drive development...' For example, Ethiopia's only substantial export is coffee, there are no substantive alternative exports, and foreign investment is tiny and limited to production for the domestic market and tourism. Without the capacity to generate sufficient capital domestically, or to attract much FDI, impoverished developing countries require increased external concessional finance to fund infrastructure and services essential to their development. Without major external assistance, countries in which 70 per cent of people are impoverished, that are paying 60 per cent of their budgets in debt service, in which 20 or 30 per cent of the adult population have HIV/AIDS, or where the national income has fallen by 30, 40 or even 50 per cent during the last decade or two, do not have the capacity to be even close to the MDGs by 2015. Jeff Sachs and colleagues write about Africa that 'The structural conditions and history that have led to the [poverty] trap include very high transport costs, small market size, low productivity agriculture, very high disease burden, adverse geopolitics and slow diffusion of technology from abroad. Africa's extreme poverty leads to low national saving rates, which in turn lead to low or negative economic growth rates.' The same constraints apply to many countries in the Asia-Pacific region. The alternative to the largely futile search for foreign investment is domestically self-reliant policies combined with increased remittances from citizens working in other countries and concessional external finance. Remittances add around a hundred billion dollars to developing country incomes, a very valuable addition to purchasing power, but not directly to investment. Increased provision of grant ODA for poor countries is a necessary condition for both construction of essential infrastructure, and also for rapid growth of services. Improvements in services such as education, health, nutrition and family planning and upgrading of science, technology and innovation are essential precursors for escape from the poverty trap. The Sachs Report on strategy to achieve the MDGs adopts a selective approach, advocating heavy concentration on those recipient countries geared by the character of their governance to make good use of the resources provided. Even so, it advocates increasing aid provided by high-income countries from around 0.25 per cent of donor national income in 2003 to around 0.44 per cent in 2006 and 0.54 per cent in 2015. Millennium Project personnel calculate the difference between total ODA needs and existing annual commitments as $48 billion in 2006, $50 billion in 2010, and $74 billion in 2015. Those figures set targets which some donors have adopted but for which the rest must aim if they want to do their share towards achievement of the MDGs. One of Jim Wolfensohn's constant themes when he was President of the World Bank was the value of cutting military expenditure to release funds for aid and also to reduce risks of war. His persistence with this theme was impressive given its unpopularity with the US Administration, but it is one that all people concerned with peace and justice should echo strongly. Increasing military spending has next to nothing to do with combating terrorism. Increased aid is a necessary condition for escaping poverty, but of course it is not a sufficient condition. Ministers and officials in developed countries love to lecture developing countries on other requirements such as improving governance, removing corruption, increasing productivity and exports and they are all essential. But let us do what we can first, before we lecture others on what they have to do. It is unlikely that increasing ODA alone will be sufficient to provide all the needed and justified funding, so it is important to actively consider other feasible, innovative possibilities for increasing finance for development. Several that are feasible and to almost everyone's benefit in developed as well as developing countries are improved: * international tax cooperation to clamp down on tax avoidance and evasion; * beginning regular issues of Special Drawing Rights by the IMF; * establishment of the International Finance Facility being proposed by the British Government; * taxing greenhouse gas emissions; * A coordinated tax on aircraft fuel; and * a global currency transaction tax; Little of this is likely to be news to you. The question is what can we do to help it happen? The principal lessons I have learnt about political campaigning are the importance of collaborating with a network of like minded people and of forming organisational alliances. It is also vital to choose carefully the forums through which one attempts to work. These kinds of tactics can be used internationally. There are many instances in which apparently weak parties in international negotiation have achieved their purposes through using alliances and networking strategically. The strategy required often involves building alliances (alliances that may include commercial enterprises and NGOs as well as governments); and using assertively, but in a measured and graduated way, the powers of punishment and reward available to the alliances. By concentrating the bargaining power, creativity, and technical competence of the alliances at forums that will be most favorable to the purpose pursued their power can be maximized. In an era of networked governance weapons of the weak can become formidable. Applying these types of insights, how might we influence our fellow citizens to want our countries to be better international citizens? There are large numbers of people in all countries who aspire for their nation to be socially just. There is a wave of concern for poverty in Europe and amongst many groups in Japan, North America and Australia. The development and community welfare groups, many community organisations, amongst many faith groups and trade union members are many people who long for their country to be the kind of egalitarian society we imagine ourselves to be. Let's build cooperation amongst us until a major movement is launched. One of the most hopeful signs of the moment is that the Y generation - sometimes called the Millennium generation, those under about 25 - are commonly interested in joining NGOs which aim to make a difference internationally - to equitable development, relief of crises, human rights and sustainable development. This is a period of extraordinary opportunity. We have the capacity to aim for an equitable, inclusive and secure society within strong and sustainable economies, characterized by mutual care, social justice, creativity, trust and environmental responsibility, and with democratic and accountable governments that value national independence and contribute to global security, peace and justice. We could reaffirm preferences for peace rather than violence, negotiation rather than confrontation, the rule of law rather than hegemonic dominance and work for international justice rather than accepting perpetual poverty and despair for half of humankind. Each of us can contribute to such goals in local and national ways. Why not do it?
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